Intercontinental Hotels Group PLC (LSE:IHG) (IHG), the owner of Holiday Inn, is reaping the rewards of the implementation of technology in its operations, helping boost profits, drive trading and expand its estate, analysts at Peel Hunt said.
Having “clearly recovered from the pandemic”, the London-listed firm is now feeling the benefits of a “normal hotel/economic cycle”, most specifically from technology upgrades it has been introducing since as early as the pandemic, the investment bank said.
Relaunching its app last year - adding a streamlined booking process, quick guest check-ins and a new way for customers to access rewards – the number of downloads, users, bookings and revenue through the channel jumped by between 40% and 50% year-on-year.
Digital channels now account for around a quarter of global hotel revenue, with half of digital bookings being made on mobile.
Loyalty users are now able to automatically connect to Wi-Fi networks through the mobile app, a process which has been rolled out in nearly 5,000 hotels globally.
IHG's one rewards app Source: IHG
An update to the group’s interface on the Chinese app WeChat helped drive a 200% increase in revenues through the channel and saw a 32% jump in the number of bookings conversions.
Investors will now be hopeful these changes can trickle through to help abate the “financing pressures that are making it hard for IHG to grow”, with the group targeting net system size increases of 4% for the full year.
Lifting its net system size by 4.8% in the first half, the group opened 21,000 rooms and 108 new hotels, a quarter of which were part of its ‘Luxury & Lifestyle’ brands, keeping the group “on track” to achieve its guidance, a trading update revealed.
Peel Hunt believes any financial pressure hampering this growth target is being amplified for smaller competitors and therefore reckons “IHG’s competitive position is improving”.
Shares in IHG are trading more than 2% higher on Tuesday, having opened at a little over 5,650p – a discount to the 6,000p share price target of Peel Hunt, which rates the stock a ‘hold’.